Since Wednesday evening, we have had more detailed information about the new tariff system that is to be introduced at short notice by the US President. To this end, he issued the Executive Order “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits” on the basis of an old emergency statute, the International Emergency Economic Powers Act (IEEPA), which was introduced in 1977 for use in the event of war and other “extraordinary threats”. He declared an economic emergency for this purpose.
His new system comprises three stages:
- 10% basic tariff rate on all imports from 05 April 2025 – in addition to the existing tariffs
- Individual punitive tariff – instead of the basic tariff – by country and country group – 20% for the EU – up to 50% for Lesotho from 09 April 2025 – in addition to the existing tariffs
- Product group-specific additional tariffs instead of the basic tariff – cars and car parts from 03 April 2025, steel and aluminium from 12 March 2025 (announced, for example, for semiconductors, copper and pharmaceuticals)
The existing tariff system will therefore be supplemented by a 10% basic tariff for everyone. Particular “wrongdoers” (according to Trump’s economic worldview) will be subject to higher tariffs; this also includes the EU, which will be subject to a 20% tariff. He presented an overview illustrating the concept of reciprocal tariffs. The figures can be found in a graphic published by Tagesschau.
In the past, 25% tariffs on cars and car parts had already been adopted as separate measures, which are to apply from 3 April 2025. Certain car parts are exempt. In addition, special US tariffs on steel and aluminium are already in force, as described in our previous Schlagbaum. Exceptions apply to these product groups with regard to the basic tariff and the country-specific tariff.
A list of the tariff measures actually adopted can be found at the Peterson Institute for International Economics.
Further EU tariffs will be introduced as countermeasures against the US tariffs. The European Commission had already responded to Donald Trump’s “erratic” behaviour (definition: errare = to wander) in advance with a two-stage plan:
- The suspension of tariffs on US products under Implementing Regulation (EU) 2018/886, such as Bourbon whiskey (50%), game consoles, motorcycles such as Harley Davidson, boats and peanut butter, was extended until 14 April 2025 and thus set to enter into force on 15 April 2025. Additional tariffs apply to the goods listed in Annex II to Implementing Regulation (EU) 2018/886 and Implementing Regulation (EU) 2020/502. We are already familiar with the effect from 2018, when these tariffs were likewise imposed in response to American tariffs.
- After the European Commission’s negotiations to avert the increased American tariffs also failed last week, the second step is likewise intended to enter into force in mid-April and will target, in particular, American agricultural products such as poultry, beef, certain seafood, nuts, eggs, dairy products, sugar and vegetables. The European Commission’s draft list can be found here.
There were also unanimous reactions from European politicians, who expressed their support for initially holding back investments in the USA.
With regard to all the new regulations, it must always be borne in mind that these rules can be amended by the President at any time. Numerous new negotiations will certainly take place in the coming weeks.
The exciting question is what companies can do now. There is a customs law dimension and a contractual law dimension.
With regard to the imposition of additional tariffs, companies should review the tariff classification and customs value. For many companies, the question of which tariff classification a product has and/or which elements of the price and transport costs are included in the customs value was relatively insignificant in the past, because no or only a small amount of customs duty was payable. These companies would be well advised to devote more attention to these questions now. Customs planning is taking on a new significance here. Consideration should be given to whether customs suspension procedures could be used in the future. Does every company know what a customs warehousing procedure or a processing procedure is, under which no import duties are incurred? We would be pleased to assist you with the details.
In addition, contractual arrangements should be reviewed. This applies both to existing and future contracts. If the increased tariff now becomes payable in an existing supply relationship, the question arises as to who must bear it. What do trade terms such as DDP or FCA provide? Can one demand that the contractual terms be renegotiated, or that the contract as a whole can be terminated? What about additional clauses that can be used to protect against such uncertainties? We would be pleased to advise you in this regard!
One recommendation can certainly already be made: now is the time for intensive negotiations with American contractual partners. This applies not only at the level of “high politics”, but also between companies. Some European companies have already announced that they will initially stop exporting goods to the USA until the situation has been clarified. However, in order to do so, one must know where one stands legally and what the chances are of being able to refuse performance. We would be pleased to assist you here.
Caution should be exercised when relocating production. In addition to many general commercial law issues, it should also be clarified whether this would actually result in no tariffs being incurred. In our previous Schlagbaum, we referred to a judgment of the CJEU, C-297/23 P, from last autumn concerning Harley Davidson, which takes a very strict view of prohibited circumvention of the rules of origin that sought to avoid the additional European tariffs by relocating final production from the USA to Thailand. At least under EU law, such a relocation must be regarded as difficult.
We would be pleased to help you navigate this customs jungle!!
